Non-Resident Indians (NRIs) often visit India for various reasons, including mandatory paperwork such as passport renewals, visa-related processes, family functions, etc. Having critical insurance coverage beforehand can provide them great financial help in case they suffer from some life-threatening disease, e.g. cancer, heart attack, stroke, coronary bypass, organ failure etc., during their stay in India. Even some NRIs plan to retire and settle in India after their long overseas stint. In such cases, purchasing critical illness insurance is advisable to exhaust the waiting period beforehand. Standard health insurance may not be sufficient to cover the costs fully in such medical emergencies.
What Is Critical Insurance Coverage For NRIs?
Critical insurance coverage in India for NRIs provides financial support in the case of life-threatening illnesses that require expensive and long-term medical treatment, such as cancer, kidney failure, organ transplant, heart issues, etc., those listed in the policy. It gives a lump sum payout on being diagnosed with any of the named critical illnesses per the policy for the first time in life. A person can opt for a critical illness cover as an add-on to the health insurance plans or get one separately. Generally, there is a waiting period of 90 days from the policy issuance date. It also has a survival period of 30 days, meaning the person has to survive this period after being diagnosed with a critical illness to be eligible for the compensation.
Key features of critical illness insurance for NRIs
- Payment: On the diagnosis of the specified critical disease, the insurance company provides the policyholder with a lump sum or amounts in installments, as decided while taking the plan.
- Flexible Usage: The payout can be used for various expenses, including medical treatment, rehabilitation, income replacement, or even to cover family expenses during recovery.
- Standalone or Rider Option: Critical insurance plans can be taken as a standalone or rider option to the base health insurance plan. Buying it as a rider option can enhance the coverage of the existing medical insurance plan.
- Tax Benefit: Critical illness insurance premiums are tax deductible under section 80D of the Income Tax Act, 1961 under the old tax regime.
- Need of the Hour: With the decline of traditional joint family structures and the rise of nuclear families, critical illness insurance has become essential. In a nuclear family setup, there often needs to be more immediate support to rely on during medical crises. Critical illness insurance provides vital financial security, ensuring families can sustain their lifestyles and afford quality treatment for severe diseases.
Difference Between Critical Insurance And Other Insurance For NRIs
Some of the differences between critical insurance and other insurances for NRIs:
Top Critical Illness Insurance Plans In India For NRIs
- FFCO Tokio Critical Illness Benefit Policy
- HDFC ERGO Critical Illness Insurance Plan
- ICICI Lombard Criti Shield Plus Plan
- Tata AIG Criti Medicare Plan
- Aditya Birla Activ Secure – Critical Illness Plan
- SBI Critical Illness Insurance Policy
- Care Assure Policy
- ManipalCigna Lifestyle Protection - Critical Care Plan
Documentation Required From NRIs
NRIs should ensure they have documents that prove Indian citizenship to purchase a health insurance policy in India:
- A valid address proof
- Recent ITR filing or PAN card
- Details of your bank account in India
- A copy of the Passport if required.
- A medical test may be mandatory to buy health insurance in India, especially for applicants with pre-existing conditions or older individuals.
iNRI helps NRIs file their tax returns under the guidance of tax experts - connect with Tax Experts.
You can also apply for a PAN card online.
Tax Benefits For NRIs On Insurance Premiums
The tax benefits on insurance premiums are available only if you file taxes as per the old tax regime. With the new tax regime, no tax deductions are available.
How Can NRIs Purchase And Renew Critical Insurance Policies In India
NRIs can purchase and renew critical illness insurance policies in India through several methods:
- Online: After uploading the required documents, NRIs can purchase and renew critical insurance directly online through the websites of Insurance Companies, Online Insurance Apps, insurance brokers, etc.
- Physical: NRIs can physically visit any branch office in India and enroll by providing the required documents.
Additional Riders And Add-ons For Enhanced Coverage
Additional riders are benefits purchased alongside the base health insurance to expand its coverage, whereas add-ons are separate policies attached to health insurance to provide more comprehensive coverage.
A few Additional riders and add-ons for enhanced coverage available are:
- Hospital Cash Rider/Cover: This option offers a fixed daily allowance during hospitalization, covering pocket expenses like transportation, food, or companion costs that aren't typically covered by the base health insurance.
- Maternity Rider/Cover: It covers expenses related to maternity, including prenatal and postnatal care, delivery, and newborn care.
- Critical Illness Rider/Cover: It provides a lump sum payment upon diagnosis of critical illnesses. It can also be purchased as a standalone policy.
- Accident Disability Rider/Cover: In case of partial or total disability, it provides financial compensation.
- Room Rent Rider/Cover: It extends the room rent limit, allowing the insured to choose better accommodations.
Are There Any Limitations For NRIs
- Geographical Coverage: Most health insurance policies only offer geographical coverage within India. If they offer overseas coverage, it is limited to emergency medical expenses and life-threatening conditions only.
- Lower Sum Assured: Health insurance providers in India usually offer a limited sum insured to NRIs. These applicants are considered risky because they do not reside in India, and it is difficult to determine their authenticity and health status.
- Claim Amount: According to Foreign Exchange Management Act, 1999 (FEMA) guidelines, the amount payable under an NRI health insurance policy is limited to the total premium paid by the NRI in foreign currency. The claim can be disbursed to a foreign bank account or to a Resident Foreign Currency (RFC) account maintained in India.
Tips For NRIs To Choose The Best Critical Insurance Provider In India
- Entry Age and Policy Tenure: Policy premiums will be lower when an individual enters early and has longer policy tenures.
- Sum Assured Amount: Ensure selecting the right amount of Sum assured as per the need of the individual. A high sum assured offers better safety during tough times.
- Coverage: Before enrolling, ensure that the policy covers a sufficient number of life-threatening diseases. The higher the number, the better the policy.
- Renewal Limit: Insurers have renewal limits of up to 65 or 70 years, and some offer lifetime renewals. Buying a policy that offers lifetime renewal is a wise choice, as health risk increases with age.
- Cashless facilities and Network Hospitals: Insurers offering cashless facilities and a wider network of empanelled hospitals in India should be chosen over others. Cashless facilities are a huge advantage, ensuring seamless treatment access without upfront payments.
- Claim Settlement Ratio: Review the insurer's claims data. A higher claim settlement ratio indicates that the insurer will also provide claims in critical illness insurance cases.
- Premium Costs: Premium costs vary between insurers offering the same features. Buy a plan that offers an affordable premium without compromising on coverage.
- Exclusions: Check for exclusions in the policy carefully to be on the safer side later.
- Waiting Periods: There are waiting periods in critical diseases, ensuring after how long the plan becomes active in such cases.
Conclusion
Critical illness insurance coverage is a must for NRIs if they are the only sole earners in the family. Such cover provides financial stability during hardships and comes with tax advantages. It also allows one to choose a payout plan that suits the individual's needs. Taking critical illness insurance will ensure peace of mind and security concerning loss of income and high treatment costs at an unpredictable time. Hence, it is a step in safeguarding a family's future while allowing one to pay attention to their health instead of the financial burdens associated with treatment.
Frequently Asked Questions (FAQs): Critical Insurance for NRIs in India
Can NRIs renew their critical illness insurance policy from abroad?
Yes, NRIs are allowed to renew their critical illness insurance policies from abroad.
Are there any specific exclusions in critical illness insurance for NRIs?
Every insurer mentions the exclusion in the policy document. Before taking the policy, one should review the policy document carefully. Some of the specific exclusions in critical illness insurance for NRIs are:
- Pre-Existing Conditions: Pre-existing diseases are not covered. Cases of substance abuse like drugs and alcohol are also not considered.
- Specific Illnesses: Any condition directly or indirectly caused by or associated with sexually transmitted diseases like Genital Warts, Syphilis, Gonorrhoea, Herpes, Chlamydia, Pubic Lice, Human immunodeficiency virus infection(HIV), and Acquired Immunodeficiency Syndrome (AIDS), etc., are not covered; only diseases clearly mentioned in the policy document are covered.
- Any mental Illness: Stress, psychiatric, or psychological disorders are not covered.
How should NRIs choose the best critical illness insurance provider in India?
NRIs should first evaluate their health needs and financial circumstances and then carefully assess the specific illnesses covered under the policy that align with their personal health risks. They should also consider the sum assured against the policy and evaluate whether it adequately addresses potential medical expenses on an inflation-adjusted basis and lost income during the treatment period. Lastly, they should check the waiting and survival period clauses, as they can influence the policy’s effectiveness.
Can NRIs get tax benefits on critical illness insurance premiums in India?
Under section 80D of the Income Tax Act 1961, NRIs also get tax benefits like resident individuals. However, these tax benefits are available only under the old tax regime.
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